Plans to redevelop Durham’s old police building may be dropped again. Here’s why
Nearly a year after the city of Durham selected a Miami-based firm to redevelop the former police headquarters site, the project may be coming to a halt.
At its work session this Thursday, the Durham City Council will consider ending negotiations with The Peebles Corp. regarding its proposed redevelopment of the 4-acre property at 505 W. Chapel Hill St. The site includes the historic police headquarters building and its parking lots.
If that happens, it will mark the second time in four years that plans to revitalize the property have been dropped, and seven years since discussions about the site’s future began. In 2021, the Fallon Co. ended its agreement with the city to purchase and transform the site into a mixed-use development.
Since the Durham Police Department moved to 608 E. Main St. in 2018, after 26 years on Chapel Hill Street, the building has remained vacant.
Last August, the City Council unanimously selected the Peebles Corp. to lead a $300 million redevelopment project, which included commercial space, open areas, and 390 apartments, some of which would be affordable to people who met income criteria. The plan also called for possibly turning the modernist former headquarters into a hotel or cultural center.
However, the deal stalled over the project’s affordable-housing component and a reported 34% increase in construction costs. According to city documents, Peebles ended up requesting a $78 million subsidy from Durham to move forward, up from $61 million requested last August.
“Construction costs continued to increase, outpacing the growth of rent in Downtown Durham. Potential tariffs threaten to further increase the cost of raw materials and interest rates remain at elevated rates in response to broader economic uncertainty,” wrote Jina Propst, the director of Durham’s General Services Department, in the documents.
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A timeline of redevelopment efforts
1950s: The modernist building is built by Milton Small as an office for Home Security Life Insurance Co.
1992: The Durham Police Department moves in.
2018: Durham police relocate, and the site becomes vacant.
2019: Durham officials begin talks with The Fallon Co. over another company, Akridge.
2021: The Fallon Co. backs out.
2023: The Durham City Council seeks a new developer for the site.
2024: The Peebles Corp. is selected.
‘Interim programming’
If project plans are dropped Thursday, the city will make plans for “interim programming,” according to Stacey Poston, the assistant director for Durham’s General Services Department.
“City administration would like to see the property used to benefit the community in some way until the market becomes more favorable for future development,” she said in an email.
Nicole Thompson, the CEO of Downtown Durham, Inc., said the halted plans are disappointing but “understandable” given global, national and local trends.
“We should not consider this as a negative or challenge for downtown,” Thompson said in a statement. “I see this as an amazing opportunity, especially as we roll out the Downtown Durham Blueprint, a 10-year plan for downtown’s continued vibrancy and growth. The location of this site and, if designed with intentionality and with careful consideration of how it can draw people and activities to downtown, could be a major catalyst for downtown’s growth.”
George Smart, the CEO of NCModernist, a nonprofit supporting residential modernist architecture, advocated for preserving the headquarters building and adding something like housing upstairs and restaurants and retail on the ground floor.
“Fortunately, the police didn’t mess up too much of the building and it has beautiful terrazzo floors, floor-to-ceiling windows [and] cherry and mahogany paneling,” he said. “Why would you ever tear it down?”
Preservation efforts would be cheaper than razing the building, he said.
“The goal is to keep the building standing and to resume it in a way that’s compatible with how it’s built,” he said in a phone interview. “The city seems unable to reach an agreement with any of the dozens of developers that they’ve talked to.”
‘Dollars and cents’
In a phone call with The News & Observer, Donahue Peebles III, executive vice president, said costs increased after the city asked for more affordable housing and a ground-floor lease, making the project “less economically viable.”
The company offered to change a planned city-backed loan into a subsidy. That would have allowed the group to sell Durham public parking or another public use (like open space) to get the funding the project needed to move forward.
But the market didn’t support it, Peebles said.
“And once it became clear that the city wasn’t willing or wasn’t able to provide the necessary support, it’s very, very tough for us to build a project or commit to building a project that can’t be done,” Peebles said.
The Peebles Corp., the largest Black-owned real estate development firm in the country, planned to contract with other minority and women-owned businesses on the project, he added. Its proposal initially included replacing the headquarters with a cultural center honoring the West End and Hayti neighborhoods. It later offered to preserve the building and turn it into a 150-room hotel.
“Ultimately, I hate to say, it’s about the dollars and cents,” Peebles said.
“It’s their land, the ball is in their court and they know better than anybody else what’s in the best interest of their constituents,” he said.
Back to square one
The Peebles Corp, founded by Donahue Peebles Jr., competed against other developers for the Durham project.
It has similar public-private projects, though, some have proven controversial, including a development in Charlotte that is being built differently than originally proposed.
During negotiations in Durham, The Peebles Corp. revised its initial housing commitment from a 390-unit apartment building, with 92 affordable units, to two separate buildings:
A 240-unit building entirely dedicated to residents making 60% of the area median income, or below $54,000 for a family of three
A 200-unit building for market-rate units
“Despite the significant increase in the number of affordable units, this change represented a shift away from the City’s stated priorities in the RFP for a mixed-income building comprised of market-rate and affordable units,” city documents state.
Other alternatives for the City Council include revisiting the site redevelopment when market conditions stabilize, providing interim programming, or pursuing smaller-scale redevelopment.
Thursday’s meeting begins at 1 p.m. at City Hall.
This story was originally published June 4, 2025 at 7:00 AM.